Hankook chairman to strengthen control through capital increase

Seoul-based Korea IT Times reports that Hankook Tire’s holding company, Hankook Tire Worldwide, will increase its capital by issuing capital stock for noncash assets. This is being done in order to make Hankook Tire its subsidiary, the ICT journal explains. Through the capital increase, Hankook Tire chairman Cho Yang-Rai and his family will be able to strengthen their control over the company by doubling their stake in the holding company.

On 20 May, Hankook Tire Worldwide held a board of directors meeting and voted to increase its capital by 1,595 billion won (£947 million) in an effort to turn the corporate structure into a holding company. Following the announcement of this meeting the next day, Hankook Tire Worldwide and Hankook Tire share prices showed mixed results. Due to the share value dilution, Hankook Tire Worldwide’s price fell 8.47 per cent to close at 18,900 won (£11.22) while that for Hankook Tire gained 0.95 percent to 53,300 won (£31.65).

 Shin Jung-gwan, analyst with KB Investment & Securities, was quoted by Korea IT Times as saying: “Even after Worldwide takes over Hankook Tire as a subsidiary, there is little to expect from the change comparing to other holding companies. It would be more attractive to investors if Worldwide owns Hankook Tire directly rather than indirectly through a holding company structure.”